The Department of Labor announced Monday that it has pulled its current proposal for the definition of a fiduciary off the table. The agency will take up the issue in early 2012 and re-propose a fiduciary definition after more industry input.
For now, the move provides a reprieve for advisers who were worried that the current proposals would encumber firms with costly restrictions on how they deliver advice to savers and investors.
Before the DOL temporarily pulled its proposals, it was embroiled in debates with members of Congress and the industry over whether the proposals were calibrated properly. Investment advisers worried that workplace-sponsored defined contribution plans would come under regulation by the Employee Retirement Income Security Act of 1974, or ERISA.
DOL said it wants to ensure an open exchange of views, and protect consumers while avoiding unnecessary, burdensome costs.
Specifically, the DOL aims to make it clear that fiduciary advice is limited to individualized advice directed to specific parties. There were industry concerns that the proposed definition might cover routine appraisals. It was also unclear whether the rule applied to arm's length commercial transactions, like swaps.
Fair Value Holding Up Amid Volatility: Deloitte
Mutual funds' fair value procedures are holding up amid the unprecedented market volatility that has resulted from economic uncertainty, Middle East unrest and environmental disasters, Deloitte found in its Ninth Annual Fair Value Pricing Survey. This year's survey queried executives at 79 asset management firms around the world with more than 3,300 fund offerings with $2.6 trillion in assets under management.
Thirty-five percent of firms made no changes to their fair value policies in the past year, up from 15% the year before, Deloitte found.
"When faced with recent events that added significant stress to global markets, our survey indicates that mutual funds are well prepared to handle investment valuations," said Cary Stier, vice chairman of Deloitte and leader of the asset management services practice. "They knew what to do and how to monitor unique situations."
Investors Pull $33.6 Billion Out of Funds in August
Investors yanked $33.6 billion out of U.S. mutual funds in August, one of the biggest months on record with redemptions, according to Strategic Insight. Year-to-date, redemptions have totaled $21.2 billion. Both stock and bond funds were hit with withdrawals in August, with $21.4 billion coming out of stock funds and $10.8 billion from bond funds. These outflows come on top of big redemption figures in the previous two months; in July, investors withdrew $23 billion and in June, they took out $17 billion.